System for trading binary options, Three Criteria Of A Good System
For many traders, this question is almost impossible to answer.
Regulation and fraud[ edit ] Further information: Securities fraud Many binary option "brokers" have been exposed as fraudulent operations. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect a payment, the operator will simply stop taking their phone calls.
Luckily, there are a few concrete criteria for a good binary options strategy or free systems yourself. This article will outline these criteria and show you how to build good strategy based on them.
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While these might not be the criteria you read in most trading books, they are the criteria that really matter. Criteria 1: Repeatability Repeatability defines the characteristic of a strategy that it always gets you to system for trading binary options the same thing in the same situation.
A strategy is repeatable when it clearly defines which assets you analyse, how you analyse them, and what you do once you find a trading opportunity.
There is no room for gut feelings or hunches, the only thing that drives your decision can be cold, hard facts.
For every reading over 80 and below 20, you know how you would invest. For all readings between 79 and 21, you would stay out of the market.
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There is no grey area and no room for personal judgments. Faced with the same value, you would always do the same thing.
Repeatability is so important because random trading is the number reason why traders lose money. They follow their gut feelings, and sometimes they will make some money, and sometimes they will lose some money.
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But they will never know why. After a while, they will system for trading binary options a loss significant enough to wipe out a large part of their account balance.
Coming back from this loss will be impossible. Because you always do the same thing, you know whether what you are doing works. This brings us to the next criteria for a good binary options strategy: comparability.
Criteria 2: Comparability Our second criteria directly builds on our first one.
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When you have created a repeatable system, you can compare it to other repeatable approaches. You compare the winning expectancies of multiple trading systems.
The winning expectancy is the factor of your strategies average payout and total return. The total return is the average payout plus percent because you also have to factor in that you also get your initial investment back.
It calculates how much of your original investment you get back on an average trade. A winning percentage over percent indicates that you make money on an average trade.
A winning percentage below percent indicates that you lose money on an average trade.
You can compare the profitability of multiple strategies by comparing their winning percentages. Comparability is especially important when you try to improve your appraoch.
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After every modification, you can compare the new winning percentage to the old one. If your modifications improved your winning expectancy, keep them. If your modifications decreased your winning expectancy, go back to your original strategy.
When you try something new, you can avoid having to judge the changes based on feelings. You have hard facts that help you decide which way is better. This brings us to the third element of a good trading methods: improvability.
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Element 3: Improvability Improvability is the final characteristic of a good strategy. It combines the first two criteria and builds on them.
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Improvability is the most important criteria of a trading system, but it would be impossible without the first two. This statement might surprise you.
How do you get better? And what if you made money but suddenly start turning a loss? When you know how to improve your strategy, its initial winning expectancy is unimportant. After a while, you know that you can get the winning expectancy over percent.